The document discusses oil palm processing and the Nigerian oil palm industry. It notes that oil palm is mainly produced in southern Nigeria and its fruit contains palm oil and palm kernel oil. Nigeria's oil palm industry is valued at 221 billion naira and employs 4 million people directly, though local demand of 2 million metric tonnes far exceeds domestic supply of 0.6 million metric tonnes. The industry attractiveness for investors depends on factors such as low buyer power, varying supplier power, threats from substitutes, barriers to entry, and minimal competitive rivalry.

1. OIL PALM PROCESSING
Oil pal m is a crop which thrives in tropical regions especially in West Africa and Malaysia.
Various parts of the oil palm tree such as leaves, flowers and fruits can be applied to differ-
ent uses including food, medicinal and cosmetic. This report shall however focus on the oil
palm fruit. The oil palm fruit is a reddish in colour and it is about the size of a large plum.
Its flesh is rich in oil known as palm oil. It also has a kernel referred to as the palm kennel.
Palm oil and Palm kernel oil are the major products derivable from the oil palm fruit.. Oth-
er products include kernel cake and fibre.
GLOBAL DEMAND & SUPPLY OF OIL PALM PRODUCTS
While Palm oil is not usually consumed directly in most parts of the world, it is a major
commodity in the world market as a report indicates that nearly all packaged foods
(including ice cream) in the United States contain palm oil. Manufacturers of processed
foods, drugs and cosmetics are continually finding these oils useful. The global palm oil
market was valued at USD 65.73 in 2015 and it is projected to be USD 92.84 in 2021 with an
average annual growth rate of 7.2%. Key players
NIGERIAN OIL PALM INDUSTRY
The Nigerian oil palm industry though largely underdeveloped is full of economic poten-
tials. Players in the industry are generally categorised into four viz. Estates, Millers, Refin-
ers, and Users. Estates refer to the farms where planting and harvesting is done, Millers
extract oils from the fruits and nuts, refiners convert extracted oils into useable forms. Users
include industrial users and household consumers. Oil palm is produced mainly in the
southern part Nigeria especially in Edo, Delta, Rivers, Imo, Ondo etc. National demand is
estimated to be 2 million metric tonnes, while supply is put at 0.6 million metric tonnes.
Thus giving rise to a deficit of 1.4 million metric tonnes. The industry contributes about 221
billion naira to GDP and engages up to 4 million persons in direct production alone.
• Nearly all processed
foods in the US contain
palm oil.
• Indonesia is the
world’s largest produc-
er of palm oil with av-
erage output of 31 mil-
lion metric tonnes year-
ly.
• Indonesia and Malay-
sia together produce
up to 85% of world oil
palm output.
• Nearly all parts of the
oil palm tree is useful
for food, medicine, cos-
metics, fuel etc..
• Nigeria is 5th largest
producer of oil palm in
the world, and the larg-
est in Africa.
• Nigeria’s oil palm in-
dustry is valued at
N221 billion.
• Up to 4 million direct
jobs have been created
by the oil palm indus-
try in Nigeria.
INVESTORS SNEAK PEEK

2. INDUSTRY ATTRACTIVENESS:
• BUYERS POWER
Buyers have a low bargaining power given that in the Nigerian oil palm market demand
outweighs supply. This factor accounts for the attractiveness of the cashew industry.
• SUPPLIERS POWER
The suppliers power in this industry varies according to the category to which a firm belongs
in the processing chain. Suppliers power is low for millers due to the fact that supplies can be
obtained from many (mostly small) farms. Suppliers power rises significantly for refiners
however, since there are relatively fewer millers available. Based on this factor therefore, the
industry is attractive for a miller and unattractive for a refiner.
• THREAT OF SUBSTITUTES
There are a number of substitutes for palm oil and kernel oil such as soya oil, coconut oil,
groundnut oil etc. This factor reduces the attractiveness of the industry.
• THREAT OF NEW ENTRANTS
The position of existing firms is stronger if there are barriers to entering the market. Oil
palm processing requires the use of heavy (and costly) capital equipment; this makes it diffi-
cult for new entrants to penetrate. This factor enhances the attractiveness of the industry.
• COMPETITIVE RIVALRY
There are relatively few firms in the oil palm processing industry. This means there is mini-
mal competitive rivalry. This factor enhances the attractiveness of the industry.
• Oil palm is produced
mainly in the southern
states of Nigeria.
• Local demand for oil
palm products far out-
weighs supply, creating a
deficit of 1.4 million met-
ric tonnes annually.
• There are 4 key players in
the Nigerian oil palm in-
dustry viz. Estates, Mil-
lers, Refiners, Users.
• Unlike in some parts of
the world, palm oil is con-
sumed directly as food in
Nigeria.
• Oil palm processing is
highly capital intensive.

3. PearlMutual Consulting Ltd (‘PearlMutual’ or ‘the Company’) is a business
advisory firm established in September 2009 to offer services in Financial Ad-
visory, Executive Training and Human Capital Development. The Company
is incorporated as a private limited liability company under the Companies
and Allied Matters Act 1990 of the Federal Republic of Nigeria (RC845125).
The PearlMutual team consists of individuals with a rich depth of experience
from many organizations and industries. Therefore, the team is able to proffer
and deliver solutions to clients across a broad range of industries with a view
to engender sustainable business growth.
Our mission
To help our clients turn business challenges into business performance ena-
blers.
Our vision
To be one of the leading consulting firms in Africa.
ABOUT US
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provided are reliable, we do not represent it as accurate or complete, and should not be relied
on as such. Information in this document should not be interpreted as investment or person-
al investment advice. Always consult a financial advisor before making any investment deci-
sions. Past performance is not a guarantee of future performance. We do not accept any lia-
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4. PearlMutual Consulting Ltd (‘PearlMutual’ or ‘the Company’) is a business advisory firm
established in September 2009 to offer services in Financial Advisory, Executive Training
and Human Capital Development. The Company is incorporated as a private limited lia-
bility company under the Companies and Allied Matters Act 1990 of the Federal Republic
of Nigeria (RC845125).
The PearlMutual team consists of individuals with a rich depth of experience from many
organizations and industries. Therefore, the team is able to proffer and deliver solutions to
clients across a broad range of industries with a view to engender sustainable business
growth.
Our Mission
To help our clients turn business challenges into business performance enablers.
Our Vision
To be one of the leading consulting firms in Africa.
DISCLAIMER
This service is created for informational purposes only. While we ensure the information provided are reliable,
we do not represent it as accurate or complete, and should not be relied on as such. Information in this docu-
ment should not be interpreted as investment or personal investment advice. Always consult a financial advi-
sor before making any investment decisions. Past performance is not a guarantee of future performance. We do
not accept any liability for any loss, damage or other injury resulting from its use.
ABOUT US